Shirking, Standards and the Probability of Detection
22 Pages Posted: 7 Mar 2015
There are 2 versions of this paper
Shirking, Standards and the Probability of Detection
Shirking, Standards and the Probability of Detection
Abstract
By relaxing the common efficiency wage assumption of exogenous shirking detection probabilities, we demonstrate how standards and efficiency wages are related. In a more general setting where the probability of detection depends upon the equilibrium effort level of non-shirkers, we show that the uniformly positive (negative) supply-side relationship between wages (unemployment insurance) and effort is no longer guaranteed. Profit maximization on the part of the firm, however, ensures that effort will depend positively (negatively) on wages (unemployment insurance) in equilibrium.
Keywords: monitoring, standards, efficiency wages
JEL Classification: J33, J41, J54
Suggested Citation: Suggested Citation
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